The secondary bond market yields seesawed during the week ending May 21, 2021, decreasing during the early part of the week and increasing towards the latter part of the week once again.
Activity mainly centered on the short end of the yield curve as yields on the liquid maturities of 2022’s (i.e. 01.10.22 & 15.12.22), 2023’s (i.e. 15.07.23 and 15.11.23), 01.12.24 and 01.05.25 were seen decreasing during the early part of the week to weekly lows of 5.57%, 5.58%, 6.10%, 6.19%, 6.58% and 6.88% respectively against their previous weeks closing levels of 5.55/60, 5.60/62, 6.15/20, 6.25/28, 6.60/70 and 6.92/97 on the back of the 364 day bill cut off rate held steady at 5.18% for a fifth consecutive week.
The positive outcome at the weekly Treasury bill auction, where the total accepted amount increased to a high of 90.28% of its total offered amount against its previous weeks 44.70% helped boost sentiment as well.
Nevertheless, profit taking following the outcome of the monitory policy statement, at where policy rates were held steady for a consecutive seventh announcement led to renewed selling interest. Yields increased once again with the maturities of 2023’s (i.e. 15.07.23 and 15.11.23) and 01.12.24 hitting highs of 6.15%, 6.27% and 6.64%.
Maturities of 15.11.22, other 2023’s (i.e. 15.01.23, 15.03.23, 15.05.23 and 01.09.23), 15.09.24, 01.08.25, 2026’s (i.e. 15.01.26,01.02.26 and 01.08.26), 01.07.28 and 15.05.30 changed hands at levels of 5.60%, 5.65%, 5.80%, 6.05% to 6.06%, 6.20% to 6.23%, 6.50% to 6.52%, 7.04%, 7.30% to 7.36%, 7.25% to 7.32%, 7.50% to 7.52%, 7.97% and 8.10% respectively as well. In secondary market bills, durations centering July, August and October 2021 maturities changed hands at levels of 5.01% to 5.02%, 5.00% to 5.12% and 5.11% to 5.15%.
The National Consumer Price Index (NCPI) was seen increasing for a third consecutive month to register 5.5% on its point to point for the month of April against 5.1% recorded in March. The annualized average remained steady at 5.3%.
In money markets, the total outstanding liquidity surplus decreased for a third consecutive week to Rs.116.42 billion against its previous weeks Rs.130.56 billion while CBSL’s holding of Gov. Security’s decreased to Rs.861.73 billion against its previous weeks of Rs.874.02 billion. The weighted average rates on overnight call money and repo remained mostly unchanged to average 4.67% and 4.69% respectively for the week.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
Courtesy: Wealth Trust Securities Ltd